The Home Equity Theft Reporter

Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.

The owners of an apartment complex who took nearly two months to repair a broken elevator, leaving residents with disabilities essentially stranded in their apartments, have been sued over the summer 2015 incident.

Capitol Station in Indianapolis, financed by the U.S. Department of Housing and Urban Development, provides housing for people ages 62 and older.(1) The three-story building is advertised as wheelchair accessible, and many of the residents have mobility issues and are unable to take the stairs, according to the complaint filed by four residents and the Fair Housing Center of Central Indiana Inc.(2)

The federal lawsuit alleges that Capitol Station was without a working elevator for five and half weeks in August and September 2015, resulting in harm to residents with disabilities. The FHCCI conducted an investigation after being contacted by residents.

Plaintiffs allege owners and management failed to make repairs in a timely fashion and refused to provide reasonable accommodations to residents with disabilities, causing “physical harm, humiliation and emotional stress.” They seek damages under the federal and Indiana Fair Housing Acts and an order that the defendants receive training and alter their policies and practices to provide reasonable accommodations to disabled tenants residing in their property.

Defendant City Refuses To Cave In To Possible 'Shakedown' By Developer Who Invoked Fair Housing Act In Bringing Lawsuit Seeking $1+ Million In Damages Over Building Permit Denial; Judge To Litigants: If You Don't Settle This Matter Between Yourselves, I'm Booting The Case!

In Macedonia, Ohio, the Nordonia Hills News-Leader reports:

A federal judge has stated she intends to dismiss a complaint filed in 2013 against the city over a property dispute, while parties in the case have until next week to decide whether they want to meet to mediate their differences with a court magistrate before she makes her decision final.

In a Feb. 10 "memorandum opinion and order," Judge Sara Lioi, of the U.S. Court for the Northern District of Ohio, ruled plaintiff Farnhurst LLC has failed to prove any of its federal claims "that brought this fundamentally local dispute to federal court." Farnhurst is a partnership between brothers Frank and Jorge Pla, according to court records.

Without enumerating them, Lioi said the Farnhurst complaint contains state and local issues the court is not required to decide, adding parties in the case have until Feb. 16 to tell the court if they agree to mediation. If the two sides don't agree to mediation, "the court will enter final judgement," and dismiss the case in the city's favor.

The complaint involves a 2.3 acre vacant property at the southeast corner of Timber Ridge Drive and Shepard Road, just south of Route 82 in the Parkview Estates subdivision, owned by Farnhurst.

The complaint alleges the city and former and current city officials, in denying a building permit requested by Farnhurst to build two homes on the property abused their authority in violation of the federal Fair Housing Act and equal protection guarantees under the U.S. Constitution. The complaint included a demand for unspecified compensatory damages and $1 million in punitive damages.

A settlement has been reached in a five-year legal battle over a proposed $93 million veterans, senior and people with disabilities living community that allows Auburn Hills-based Moceri Cos. to increase the number of living units in the project and add additional amenities in Oakland Township.

A new release said U.S. District Court Judge Terrence Berg must still enter the settlement as a consent judgment before it takes effect.

Township Manager Dale Stuart declined to comment other than to say that the township board Tuesday night agreed to enter into the consent judgment.

In December 2014, Moceri/DM Investments LLC, a wholly owned subsidiary of Moceri Cos., and former township supervisor Joan Buser, now a South Carolina resident, and the Michigan Paralyzed Veterans of America filed separate lawsuits against the township alleging violations of the federal Fair Housing Act, Americans with Disabilities Act, Michigan Persons with Disabilities Civil Rights Act and the equal protection guarantee of the U.S. Constitution, among others.

The complaints were a response to a zoning dispute involving the Blossom Ridge project at Adams and Dutton roads on 42 acres of Moceri Cos.-owned land proposed in 2011 with 134 congregate care living units, 60 four-plex ranch units and 44 duplexes. All are 238 residences were designed for the elderly and people with disabilities.

Fair Housing Act Being Used As A 'Sword Of Damocles' By Developers To Arm-Twist Zoning Officials Into Approving High-Density Projects??? It's "The Big White Elephant In The Room!" Says One Attorney

In Kane County, Illinois, the Daily Herald reports:

The specter of a possible housing discrimination lawsuit became the focus of closing testimony during a zoning hearing for a pending inpatient drug and alcohol treatment center that wants to locate just outside of Campton Hills [...].

Attorneys for Maxxam Partners LLC, the organization behind the pending 120-bed treatment center, said residents who have spoken against the project are voicing the same not-in-my-backyard sentiments that blacks faced while seeking housing before the federal Fair Housing Act.

The difference this time, they said, is that those who are facing discrimination are coping with disabling addiction.

***

Kevin Carrera, an attorney representing opponents of the project, focused not on discrimination law but on the county's own zoning standards for his closing argument.

Carrera said Maxxam representatives have tried to mislead the zoning board and the community about the true impact of the facility and its daily operation on crime and property values.

Carrera said there is no expert testimony to support Maxxam's claims that the treatment center will generate only five to 10 police and fire calls per year.

In contrast, Kane County Sheriff Don Kramer testified he expected 300 new police calls per year to the facility. And local fire district officials estimated 150 new annual emergency medical calls to the facility.

Carrera said those numbers clearly represent a public safety risk and disruptive traffic on mostly rural roads.

Those are all the reasons to deny the zoning application, which have nothing to do with discrimination, Carrera said.

"The big white elephant in the room is the Fair Housing Act," Carrera said. "Their patients do fall under the Fair Housing Act. However, do not be bullied into thinking that the county gives up every one of its zoning obligations in the face of the Fair Housing Act.

"You have plenty and plenty of information here, based purely on the zoning, not any of the fearmongering or bullying that's out there."

Friday, February 12, 2016

Brooklyn Victim Of Title Hijacking Racket Says Brazen Scammers Keep Coming To Her Door In Effort To Drive Her Out Of Her Home Of Nearly 30 Years; Case Is Only One Of Over 500 Open Investigations Involving Nearly 700 Properties Throughout NYC

In Brooklyn, New York, WPIX-TV Channel 11 reports:

Imagine someone else claiming they own your home after you've lived there for almost 30 years. That's exactly what one Brooklyn family says happened to them after a scam artist got the deed to their property.

"They want to put us out so they can take the house," said Brenda Pearson.

Pearson says she and her family have lived at 216 Hancock for almost 30 years. But for the past 12 months men have been knocking down her door claiming they own the house. Sometimes, she says, the men have even impersonated law enforcement.

"Marshals have come here several times to put us out and the paperwork wasn't legal," Pearson said.

Public records show the house was sold in 2014 by Calvin Traylor, Pearson's common law husband. The only problem is, the family says Traylor passed away three years earlier.

When Pearson fought back, she says a man named Gregory tried to pay her to go away.

"He told me that he'll give me $50,000 to leave the house or give him the information, asking me all these questions, and I told him no, I can't sell the house," said Pearson.

If the claims are true, Pearson isn't alone. Hundreds of families have filed complaints with the Department of Finance after their homes were allegedly stolen right out from under them.(1) But there are ways you can fight back against the scam artists.

"Well I think the first thing everyone should do, regardless of your financial status is go online to the Department of Finance and register your home so that when anyone attempts to get information on your deed, they will send you an alert," said Councilwoman Julissa Ferreras-Copeland who chairs the Committee on Finance.

Ferreras-Copeland says the Department of Finance currently has more than 500 open investigations involving almost 700 properties across the five boroughs. The majority in Brooklyn and Queens.

"It is just incredibly easy, which is what we found out in the hearing," said Ferreras-Copeland. "Someone just has to go basically register a deed at the City Registers and they can potentially own your home."

We tried to contact two men Pearson believed to be with 216 Hancock Corp – the company she says stole her home.

One, a man named Greg, never returned our phone calls. The other, a man named Henry, said he had no part of the scam, but blamed his former partner. "He brought me to the scheme, to scheme to take the house from those people," said Henry.

Ferreras-Copeland says seniors and those about to go into foreclosure are the most vulnerable to deed scams.

If you think you've been a victim, she says to contact the Department of Finance and the Attorney General right away.

"Unfortunately these scammers are getting wiser, they're getting smarter and they're out there and we really need to protect people, because our homes often times are everyone's biggest investment."

As for Pearson, she says she's not going anywhere without a fight.

"I'm not gonna let them just kick me out of here. I've been here 30 years. That's crazy."

Federal Appeals Court Affirms Conviction, 6-Year Sentence For Granite State Foreclosure Rescue Operator Who Peddled Sale Leaseback Arrangements To Financially Distressed Homeowners, Only To Leave Them Stripped Of Their Home Equity

From the Office of the U.S. Attorney (Concord, New Hampshire):

[T]he United States Court of Appeals for the First Circuit in Boston, Massachusetts affirmed Michael Prieto's New Hampshire conviction and 72 month sentence for committing mail fraud by organizing and managing a fraudulent mortgage rescue scheme.

Prieto's crime grew out of the mortgage crisis in the mid and late 2000s and involved defrauding distressed homeowners out of their properties and then obtaining money by lying on subsequent mortgage applications to strip equity from these properties.

Thursday, February 11, 2016

Real Estate Broker Cops Plea To Swiping $199K In Escrow/Purchase Deposits From Couple For Three Properties; Defendant Committed Fleecing While On Pre-Trial Release For Unrelated Mortgage Fraud Scheme For Which He Got 11+ Years In Prison

From the Office of the U.S. Attorney (Boston, Massachusetts):

A former real estate broker pleaded guilty [...], in connection a scheme to defraud a couple of the deposit they paid to purchase three properties in Randolph, Roxbury and Jamaica Plain.

Michael David Scott, 51, of Mansfield, pleaded guilty to one count of wire fraud. U.S. District Court Judge Nathaniel M. Gorton scheduled sentencing for March 25, 2016.

From February 2011 to October 2013, Scott fraudulently persuaded a couple to sign three Purchase & Sale Agreements to buy properties in Randolph, Roxbury and Jamaica Plain. The couple deposited $199,000 with Scott under the false promise that their funds would be held in escrow. However, Scott immediately spent the funds for his own use.

Furthermore, Scott knew that the first property was taken off the market by the sellers, that the bank holding the mortgage had refused to approve the sale of the second property, and that he had sold the third property to someone else. Scott never informed the couple about the status of the properties, and when they tried to get a refund of their deposits, he falsely assured them their deals were still pending and refused to return their deposits.

***.

In a separate federal case, Scott was sentenced on November 12, 2015 to 135 months in prison in connection with a multi-year, multi-property mortgage fraud scheme in Boston. Scott was on pre-trial release in this earlier fraud case when he committed the aforementioned crimes.

Single Mom Shakes $19,500 Settlement Out Of Landlord Who Allegedly Twice Denied Her Opportunity To See Rental Apartment Because She Had Twin 4-Year Old Kids; Suspecting Discrimination, Victim Had Her Cousin Act As 'Tester' In Effort To Bag Accused Culprit

In New Britain, Connecticut, the New Britain Herald reports:

A city-based landlord, a property management company and a property manager agreed to pay $19,500 and advertise differently after a woman looking to rent an apartment filed a complaint with federal housing officials claiming she was discriminated against because she had children, officials with the federal Department of Housing and Urban Development said.

The single mother of twin 4-year-old boys filed a complaint under HUD’s Fair Housing Initiatives Program after she was twice denied the opportunity to see a two-bedroom unit at Greenview Apartments at 123 Green St. last year. The woman’s identity was not revealed in HUD documents.

The property is owned by Green New Britain, LLC, and managed by PBJ Management. The two companies and the on-site property manager Philip Mahler were named in the complaint. Attorney Charles Ryan who represented the landlords declined comment.

In her complaint, the woman said that after learning she had children, Mahler told her she couldn’t look at the apartment for rent because it needed work and he would call her when it was ready, federal officials said.

He never called back, the woman said. When the woman’s mother called Mahler to inquire about the unit again stating her daughter had two children, she was told that his wife was on vacation for two weeks and he needed to consult with her.

The family had a cousin call Mahler the next day, the complaint stated. When the cousin told Mahler that the apartment was for herself and her husband, he allegedly agreed to show them the unit the next day, federal documents showed.

Green New Britain, LLC; PBJ Management and Mahler agreed to settle the complaint [] before HUD began their investigation. According to the terms of the agreement the companies agreed to pay the woman $19,500 and change their advertising practices to include that the building is child-friendly.

Editor's Note: The Connecticut Fair Housing Center, which provides investigative and legal services to Connecticut residents who believe they have been the victims of housing discrimination, represented the tenant in her HUD complaint.

Wednesday, February 10, 2016

Nevada Woman Gets 1 To 4 Years In State Prison For Fleecing Five Homeowners Out Of Over $50K In Loan Modification Scam, Causing Each Victim To Lose Home To Foreclosure

From the Office of the Nevada Attorney General:

Nevada Attorney General Adam Paul Laxalt announced that Emily Suzanne Vasquez, 47, of Inglewood, CA, was sentenced to one count of attempted theft, a category “C” felony. Vasquez was sentenced as a result of a local, state and federal investigation of a complex mortgage fraud scheme.

Vasquez and other defendants operated a scheme to defraud five homeowners struggling to pay their mortgages and in danger of losing their homes. The victims were lead to believe that Vasquez’ alleged company, California Sky, would perform one or more services, including preventing the foreclosure of their homes, lowering their mortgage payments and refinancing their mortgages and reduce the payment and principal. Vasquez failed to perform any of these services, and all five of her victims lost their homes after paying Vasquez and California Sky more than $50,000.

“The consequences for vulnerable homeowners who fall victim to scams like this one are devastating,” said Laxalt. “My Office will continue to investigate and prosecute frauds like this one to deter future scams and ensure the safety of Nevada’s homeowners.”

Second Judicial District Court Judge Elliott Sattler sentenced Vasquez to 12-48 months in prison, and had the defendant taken into custody. Vasquez was also ordered to pay nearly $53,000 in restitution to her five victims.

An Orange County, California, man pleaded guilty [] for his role in operating fraudulent debt relief firms that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees, the Justice Department and U.S. Postal Inspection Service announced.

According to the indictment, Nelson and his employees portrayed the debt relief companies as law firms and attorney-based companies that would negotiate favorable settlements with creditors. Clients made monthly payments expecting the money to go toward settlements. Nelson and his co-conspirators instead took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.

Chicago Feds Pinch Woman For Allegedly Posing As Federal Housing Representative, Then Using Foreclosure Threats To Illegally Squeeze Area Homeowners Out Of Cash

From the Office of the U.S. Attorney (Chicago, Illinois):

A Chicago woman has been charged with posing as a federal housing representative to scam homeowners out of cash, federal authorities announced [].

CYNTHIA WALLACE, 45, of Chicago, is charged with one count of falsely assuming and pretending to be an officer of the United States.

Last month Wallace posed as an official from the “Federal Housing Authority” and “H.U.D.” in numerous phone calls she placed to Chicago-area homeowners, according to a criminal complaint and affidavit filed in U.S. District Court in Chicago. During the calls, Wallace said the federal government would foreclose on the victims’ homes unless they wired money to a location determined by Wallace.

One of Wallace’s intended targets was a 79-year-old woman from the West Side of Chicago, the complaint states. Two other targets – a husband and wife from south suburban Harvey – wired more than $3,500 to Wallace, according to the complaint.

Tuesday, February 09, 2016

A federal grand jury in Atlanta charged in separate indictments two real estate investors with bid rigging and bank fraud related to public real estate foreclosure auctions in Georgia, the Justice Department announced [].

Real estate investor Douglas L. Purdy [indictment here] has been charged with one count of bid rigging and five counts of bank fraud for participating in the alleged conspiracy and scheme at Forsyth County, Georgia, foreclosure auctions from 2008 to 2012.

Clifford Wayne Hill [indictment here] was charged with one count of bid rigging and seven counts of bank fraud related to public foreclosure auctions in Gwinnett County, Georgia, from 2007 to 2012. The defendants and their co-conspirators allegedly rigged bids at public foreclosure auctions and defrauded banks that owned the mortgage notes.

Among other methods, the conspirators allegedly held secret “second auctions” of properties they had obtained through rigged bids, dividing the auction proceeds that should have gone to pay off debts against the properties and, in some cases, to homeowners who had defaulted.

***

Including the indictments filed today in the Northern District of Georgia, 14 defendants have been charged in connection with the department’s ongoing investigation into bid rigging and fraudulent schemes involving real estate foreclosure auctions in the Atlanta area; 12 have pleaded guilty.

***

Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 888-647-3258, or visit http://www.justice.gov/atr/report-violations.

The Florida Department of Law Enforcement says it has arrested and charged a Palm Bay man with setting up a scheme that defrauded customers of $275,000 between August 2010 and June 2014.

Guillermo Alonso, 53, was the former head and property manager of the Palm Bay Clubs Condominiums Home Owners Association and the investigation began in February 2015 when the Palm Bay Police Department asked them to look into complaints from the current HOA president and treasurer about money that Alonso had spent.

FDLE says an investigation shows that Alonso used HOA money for his benefit, including for renovations to his property and fast food purchases. They also say Alonso withdrew funds from the account to pay for projects that weren't completed.

They also say that Alonso hired a company he owned, Klean Power Electric, Inc., to manage the property with multiple checks transferred from the business account to his personal one, with no work able to be verified.

He also maintained control of the PBCC checkbook. They add that he had an ATM card issued to him and he changed the mailing address for statements to his home so that he would be the only one to see what he purchased or withdrew.

Alonso was charged with scheme to defraud under false pretenses of greater than $50,000.

Monday, February 08, 2016

A recent decision by the California Court of Appeal held that the practice called “dual tracking” – when a lender forecloses on a property while the borrower’s application for a loan modification is under review – violates California’s Unfair Competition Law.

The case, Majd v. Bank of America, N.A., 2015 WL 9304536 (Cal. Ct. App. Dec. 21, 2015), involves a borrower who obtained an interest-only, adjustable-rate mortgage to purchase a home in 2006. The borrower alleged that he eventually defaulted because he could not afford the monthly payments that had increased to over $5,000 due to interest rate adjustments. In 2012, the borrower submitted an application for a home loan modification. While the modification was still under review, the bank sold the property through a nonjudicial trustee sale. Shortly after the sale, the bank notified the borrower that it rejected his modification.

The borrower filed a complaint claiming, among other things, that the foreclosure was invalid because the lender violated California’s Unfair Competition Law (UCL) when they foreclosed on his home before completing the review of his loan modification. The trial court dismissed the complaint for failure to state a claim. On appeal, the Court of Appeals reversed the dismissal, holding that the bank’s alleged conduct amounted to “unfair competition” in violation of the UCL. [more]

The Fourth District Court of Appeal [] reversed a foreclosure judgment in a case that wasn't legally ready to be decided.

No default judgment was in place for U.S. Bank N.A., and one of the homeowners hadn't been served with the lawsuit when Broward Circuit Senior Judge Barry Stone(1) issued final judgment for the lender.

The appeals court ruled the case wasn't "at issue," or ready for disposition, when the trial court set the trial date or at the time of trial when Stone ruled against homeowner Frank Reilly.(2)

"It's been quite a scramble to keep up with all those abruptly set trials," Reilly's attorney, Kenneth Trent of Fort Lauderdale, told the Daily Business Review.

Foreclosure defense attorneys argued after the robo-signing scandal that Florida courts were improperly rushing to close foreclosure cases to clear crowded dockets.

In the unsigned decision, the unanimous panel threw out the 2014 foreclosure judgment in the bank's favor and remanded the case for further action.

"This will probably benefit a lot of people because Mr. Reilly is not the only one who's been in a position like this," Trent said. "It's a really good ruling and a good opinion for foreclosures because there has been a mad rush to set for trial all those cases that were hanging around on the dockets."

Reilly signed a promissory note and mortgage with his former wife, Mynabel Roche, before they defaulted on the loan and U.S. Bank sued to foreclose.

The bank served the foreclosure complaint on Roche but couldn't find Reilly. The lender claimed he was dodging process servers, so it served him by publication Dec. 3 and Dec. 10, 2013.

Before the second notice was published, Roche—but not Reilly—answered the complaint. Stone set the case for trial after Roche's filing, prompting Trent to argue the trial court denied Reilly due process.

On Jan. 2, 2014, in what would be his only filing in the case, Reilly requested an extension to respond to the complaint. Stone did not rule on that request but proceeded to trial Jan. 30, 2014.

Neither Reilly nor Roche attended, and Stone entered final judgment in the lender's favor.
That was reversible error, according to the appellate court.

"U.S. Bank did not obtain a default against Mr. Reilly. Nor did Mr. Reilly file an answer," Judges Martha Warner, Matthew Stevenson and Alan Forst wrote. "The action was not at issue either when the trial court set the trial date or when the trial itself was held."

The ruling did not impact Stone's final judgment against Roche. It also declined to rule on Reilly's challenge to the sufficiency of the bank's service by publication, saying the homeowner had not raised those issues before the trial court and could still argue them on remand.

The decision is in line with a Third District Court of Appeal case decided in 2014. The court reversed a foreclosure order in favor of Bank of New York Mellon on the issue of whether the case was ready for trial.

"The case was not at issue and therefore could not have been noticed for trial until 20 days after (BNY) filed its answer" to a defense counterclaim, Judge Edwin Scales wrote. "As we have previously held, failure to adhere strictly to the mandates of Rule 1.440 is reversible error."

Florida Rule of Civil Procedure 1.440 provides that a case may be set for trial when it is “at issue.” First, however, “[a]n answer must be served by or a default entered against all defending parties before the action is at issue.” Ocean Bank v. Garcia-Villalta, 141 So. 3d 256, 258 (Fla. 3d DCA 2014) (quoting Bennett v. Cont’l Chems., Inc., 492 So. 2d 724, 727 n.1 (Fla. 1st DCA 1986)).

Thus, where a defendant has not yet answered the complaint, and the plaintiff has failed to obtain a default, the action is not yet at issue. U.S. Bank Nat’l Ass’n v. Croteau, 40 Fla. L. Weekly D1237 (Fla. 4th DCA May 27, 2015).

U.S. Bank did not obtain a default against Mr. Reilly. Nor did Mr. Reilly file an answer. Therefore, the action was not at issue, either when the trial court set the trial date or when the trial itself was held. This is reversible error. See Tucker v. Bank of N.Y. Mellon, 175 So. 3d 305, 306 (Fla. 3d DCA 2014).

Accordingly, we reverse the final judgment of foreclosure as to Mr. Reilly and remand to the trial court for further proceedings consistent with the foregoing.

Sunday, February 07, 2016

[T]he problems faced by Airbnb providers was recently illustrated in the case of Chen v. Kraft, decided [last] month by the Appellate Division of the Los Angeles County Superior Court.

The defendant, Mr. Kraft, occupied a rent-controlled unit in the Venice area of Los Angeles, a very popular area near the Pacific Ocean thought by many as hip and Bohemian. Kraft decided to make some extra money on Airbnb by listing the attic of his rental unit, which he called a "loft."

After Kraft got away with it for a while, his landlord, Ms. Chen, commenced an eviction proceeding. She alleged that renting out the unit was illegal because the premises was located in an R-1 zone (one-family dwelling) which did not permit hotels or apartments — a ground for eviction under the Los Angeles Municipal Code.

Ms. Chen also submitted a City of Los Angeles Tax Registration Certificate demonstrating her payment of Los Angeles's "Transient Occupancy Tax" whereas Mr. Kraft, no surprise, could not demonstrate his own tax compliance. The trial court granted summary judgment in favor of Ms. Chen, and the Appellate Division agreed. Per the Appellate Division, the Airbnb agreement at issue constituted "an illegal contract in violation of existing regulations, and was therefore void and unenforceable."

Thus, in Los Angeles, a court has decided you can't put your unit on Airbnb, and if you do, the arrangement will be adjudicated illegal. Other cities, including New York and San Francisco, have also enacted legislation addressing temporary rentals such as Airbnb, with attendant slings and arrows of outrageous fortune.

The takeaway is this: If you're deciding to BNB or not BNB, you should perform some due diligence to make sure that your host municipality fosters a supportive environment. And just as importantly, you must satisfy yourself that your listing complies with applicable codes and regulations.

The suit, filed against Soderberg Apartment Specialists and MSP Crossroads Apartments LLC, names 35 plaintiffs who allege that Soderberg, the Brooklyn Park company that partnered with a Milwaukee investment firm to make the purchase in September, engaged in housing discrimination when instituting new policies. The rule changes meant a significant portion of residents would have to move out of the 698-unit complex.

Concierge is undergoing a massive renovation project in which all the units are being remodeled while further amenities are added. The move toward a more upscale market position comes with rent increases in addition to the policy changes.

The complex, consisting almost elusively of one-bedroom units, no longer allows more than two people per bedroom, meaning families with children must move. Also, the new management is no longer accepting Section 8 vouchers – there had been 35 vouchers being used at the complex before the transaction. Furthermore, Soderberg’s policy for another housing program, Group Residential Assistance, is becoming more strict, the plaintiffs add.

When contacted by the Sun Current, Soderberg did not immediately provide a response to the lawsuit’s assertions.

Of the residents who must find new housing, the plaintiffs estimate 130 relied on Section 8 or GRH. They add that since the sale, nearly 160 households have likely moved out. New policies such as social security number requirements and a prerequisite credit score of 625 contribute further to the displacement, the plaintiffs continue.

Those plaintiffs are joined in the suit by statewide tenant advocacy group HOME Line, and are represented by the St. Paul-based Housing Justice Center.(1)The groups contend that the affected Concierge tenants belong to federal protected classes based on race, disability, familial status and national origin.

“Just because we’re low-income does not mean we do not have human rights,” said Aurora Saenz, a former Concierge resident who said she moved out due to the new occupancy standards regarding families with children. “We may not be millionaires but we cared for our homes.”

Tim Thompson, lead attorney for the plaintiffs, explained the goal of the suit.

“The lawsuit seeks to stop and roll back the series of actions by the owner driving out current tenants, Thompson said.” This could include the exorbitant rent increases, the overly restrictive admission requirements and the refusal to participate in programs essential to low income and disabled tenants.”

The impact goes beyond the tenants named in the suit, according to Eric Hauge, an organizer at HOME Line.

“This is perhaps the largest source of unsubsidized affordable rental housing in the Twin Cities region,” Hauge said.

“Its loss would be a tremendous blow to the region’s collective efforts to narrow the huge gap between demand and supply for affordable housing, and will exacerbate harmful gentrification trends if left unchallenged.”

(1)HOME Line is a nonprofit Minnesota tenant advocacy organization that provides free and low-cost legal, organizing, education, and advocacy services so that tenants throughout Minnesota.

The Housing Justice Center (HJC, formerly known as the Housing Preservation Project, or HPP) is a St.Paul, Minnesota-based nonprofit public interest advocacy and legal organization whose primary mission is to preserve and expand affordable housing for low income individuals and families in Minnseota.

HJC seeks to prevent the loss of affordable rental housing by conversion to market rate, demolition, foreclosure, and other causes.

(1) The Tennessee Fair Housing Council ("TFHC") is a private, non-profit advocacy organization whose mission is to eliminate housing discrimination throughout Tennessee. Our enforcement program is based in Nashville and concentrates on Davidson, Cheatham, Dickson, Rutherford, Sumner, Williamson and Wilson counties.

Among other things, TFHC takes in dozens of complaints of housing discrimination each year. It investigates those complaints, counsels the clients, and, in some cases, represents them in administrative actions or lawsuits. It also assists complainants in filing administrative complaints even where it doesn't provide representation.

HUD Yanks Memphis Landlord's Section 8 Contracts Over Alleged Lies About Made Repairs, "Systemic Failure To Maintain" Premises, Forcing Mass Displacement Of Low Income Renters; Landlord's Response: We Intend To Find New Owner To "Perform Rehabilitation" (Gentrification?) On The Complexes

In Memphis, Tennessee, Fox13 reports:

HUD has had enough of the Global Ministries Foundation operating a number of Section 8 housing complexes in Memphis, and they have pulled the contract.

The agency said the living conditions at the Warren and Tulane Apartments were “troubling,” and they found evidence that GMF failed to maintain the property in a decent, safe and sanitary manner for residents.

HUD decided to cut ties with the owners of Global Ministries Foundation. [...] According to a letter from HUD to the Global Ministries Foundation, inspectors found "systemic failure to maintain” the properties.

***

HUD also accused Global Ministries Foundation of incomplete repairs and no plan to fund the work or timetable to complete it.

GMF's owner was given a list of violations that required immediate car and response. The owner, according to a notice of abatement from HUD, advised all violations had been corrections.

Upon further inspection, that was deemed untrue.

HUD staff visited the properties in January and referred to the experience as "troubling" because of a collection of issues and violations. In addition, the HUD staff heard and saw evidence of crime and lack of control by the owner.

Based on all of these factors, HUD decided to abate the contract with Global Ministries Foundation.

Now, GMF is responsible for relocating residents while improvements are made. The announcement has some people, like Lisa Williams, worried. "I don't have any kids and I have income, but there are people out here that don't have income and have babies. Where are they people going to go?" Williams asked FOX13.

The nonprofit, Global Ministries Foundation, also has HUD looking over its shoulder and into its ledger.

The agency wants GMF to submit a full accounting of the finances at each of the properties, and money spent on repairs that HUD didn't find acceptable must be returned.

CBC News: Betrayal of Trust (A CBC investigation reveals how lawyers across Canada have misappropriated and mishandled clients money, to the tune of tens of millions of dollars, or sometimes even charging vulnerable people top dollar for shoddy services)

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